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Showing posts with label Luxury. Show all posts
Showing posts with label Luxury. Show all posts

Saturday, October 23, 2021

Why the Trend-Seeking Luxury Consumer Loves the Branded Residence Sector

 This article first appeared in Hospitality Insights in mid-October.

Aston Martin. Baccarat. Porsche. Versace. Aside from being ultra-luxury brands, what do these companies have in common? All have lent their names to branded residences.

Branded residences emerged as a real estate market segment about 20 years ago, when hotel brands started creating mixed-use developments. Adding a residential element to hospitality projects made it easier for developers to get financing and more immediate return on investment while simultaneously benefiting from a long-term revenue stream on the hotel side. 

For hotel companies, branded residences were a natural brand extension for luxury groups like Four Seasons and Ritz-Carlton, trading on a tradition of hospitality, service and high-end amenities. After all, who wouldn’t enjoy living in a place that shared concierges, housekeepers, celebrity chefs and spas with the most discerning hotel guest? Riyan Itani, head of Savills International Development Consultancy, put it simply: “The concept of branded residences, from its inception, has been based on the provision of services and facilities that one would typically find in a hotel.”

The synergies between high-end hotel brands and branded residential developments, then, are somewhat obvious. But what value does an automotive brand, or a jewelry brand, or a fashion brand bring to the dining room table?

The Porsche Design Tower in Miami

According to Savills, during the last ten years, the number of branded residences increased by 170 percent, adding more than 52,000 units across 370 projects. In the beginning, branded residences were almost exclusively the domain of luxury hospitality brands, but that is changing. as more and more non-hospitality luxury brands enter the fray. Part of the reason for the shift is that some markets have reached capacity in terms of luxury hospitality branded offerings, while in places more driven by trends, developers are looking for sexy points of product differentiation.


Palazzo Versace, Australia

While a few such non-hospitality brands were prescient early on (Palazzo Versace on Australia’s Gold Coast was actually quite revolutionary when it opened in 2000), most of the newer players have come on the scene during the last five years. The Porsche Design Tower opened in Miami in 2017.  Aston Martin will add more automotive cachet to the Miami residential scene in 2022, and Bentley will enter the mix there by 2026. Lamborghini is shifting into high gear in Dubai with an immense project (8,000 residential units) to be opened by 2024. Italian car design firm Pininfarina is growing its presence through branded residences in Brazil and Guatemala. High-end consumer goods brands like Baccarat, Roberto Cavalli and Armani are also players, although most of these branded developments are one-offs, mostly located in hot branded residential real estate markets like Dubai and Miami.

Cyrela by Pininfarina, Sao Paolo, Brazil 

The Appeal For Companies, Developers and the Consumer

There are three stakeholders in every branded residential scheme. There’s the brand, the developer and the consumer. In theory, the branded residences sector offers an opportunity for high-end products to expand their brand profile and diversify their business model, while giving developers a unique selling proposition and providing consumers with bragging rights. For non-hospitality brands to succeed, says Chris Graham, author of The Branded Residence Report, an understanding of local markets and developers, careful buyer targeting and brand alignment are all essential.  

Having branded residences allows the Bulgaris, Versaces, Armanis and Baccarats of this word to attach an experience to their products, according to luxury branding expert Piers Schmidt, while at the same time, says Graham, offering a big WOW factor that will result in extensive PR. 

“Brands can create a theater of dreams; a temple to the brand at which the consumer can come and worship,” said Schmidt. Theoretically, this can lead to a deeper relationship with the brand’s consumer. But that prospect comes at great risk to these brands, according to Barry Landsberg, a long-time veteran of the branded residence world. “The service culture is inherent in the DNA of hospitality brands. Non-hospitality brands do not bring the advantage, so that to be successful competitors in the high-end residential space, they will need to invest in the hospitality ingredients that have been a mainstay of the industry, or potentially risk tarnishing their brand equity. If they don’t get the service component right, that’s the biggest risk if they don’t deliver.”

For the developer, a non-hospitality luxury brand may offer more flexibility in terms of design and required levels of service. That’s because non-hospitality brand deals may not come laden with extensive royalty fees, license fees and service charges, along with strict requirements to ensure the development meets brand service standards, according to Landsberg. Furthermore, developers are always looking for an edge, and adding a seductive brand label to a building, particularly in saturated, status-savvy markets, can increase the allure and the price of the product. That said, Savills notes that while luxury hospitality brands add an average of a 31 percent price premium to branded residences, non-hospitality luxury brands bring in a price premium average of 25 percent.

So, it appears that some consumers are still willing to pay a premium for their non-hospitality branded residences. But the experts say there are caveats, especially given that there is not an automatic assurance of consistent quality service that is baked into hospitality brands.

For a non-hospitality branded residence to sell, a consumer must really buy into the brand at hand. But is that enough? After all, while there are natural synergies between luxury hotels and luxury real estate, one may wonder what value crystal or car brand brings to a potential homeowner. How do you translate the brand essence of a dress or a piece of jewelry or an automobile into where you live? After all, “new car smell” doesn’t really translate in a home environment. But automotive brands, for example, in trying to bring the brand aesthetic home, are doing everything from adding automotive elevator systems which enables residents to store their vehicles in their very own “sky garage” (a multi-car glass display case situated right next to their living room), to sweetening the purchase of a multi-million dollar condo with a “throw-in” of a car, to adding design elements borrowed from the car itself. There may be more relevant synergies in terms of design with fashion houses, particularly those that have homeware or interior design in their portfolios, but in all cases, the service factor is still an unknown. 

A "sky garage" in the Porsche Design Tower
cnn.com

What the Future of Non-Hospitality Luxury Residences May Look Like

What kind of competition will these schemes offer vis-a-vis hospitality projects?

For a while, it looked like non-hospitality branded residences were merely the new shiny object. But, according to Landsberg, certain projects have proven that "if a brand has the ability to draw from a dedicated affinity group; if it works with a developer who understands the local market and the branded residence space; and it brings on designers to incorporate elements of product integration," he said, "in other words, there is a managed process through architecture, design and service, it can be a success, especially in places like Miami and Dubai, which are dynamic, design-forward markets, and developers there understand their markets well and are looking for ways to differentiate in those crowded markets." 

In fact, the success of the schemes may be more dependent on market than on brand, according to Graham. In his Branded Residence Report, he writes, “The non-hotelier segment is typically more focused in emerging markets than the branded residence sector as a whole. Demand for high-end properties has risen quickly in emerging markets in parallel to wealth creation. The nouveau riche buyer may be more attracted to unique products and these lifestyle orientated brands resonate well amongst brand-friendly and knowledgeable purchasers.” Such  buyers, he added, are quite prevalent in places like Dubai, Miami and Brazil, where “bling and design appeals.” 

Because of their success in those places, Graham says “the viability question of non-hospitality brands has been put to bed. Look at brands like Versace and Armani, which all decided to license their names and design as a brand extension and way to get additional revenues. They took a leap of faith that the product would extend into residential and people would pay a premium and it came to be. Subsequently, the sector has taken on a life of its own.” 

Piers Schmidt, however, is not quite as bullish on the sector. “I am pretty negative about it, given that many schemes have not worked and those that have haven’t grown beyond one or two brand residence properties," he said.

Unlike hotel brands, which seem to be able to plant their flags anywhere, non-hospitality brands will be limited, to those specific markets that may be more prone to be susceptible to the label factor of a brand. In that respect, non-hospitality luxury branded residences may end up being more of a one-off novelty than a replicable international model.

Wednesday, May 8, 2019

Cincinnati Courts Luxury Travelers Through Tennis






Most major sporting events take place in cities that already attract large numbers of high-end tourists. But for one small Midwestern city, hosting a professional tennis tournament is a way to attract luxury travelers who might otherwise not consider a visit.


Monte Carlo, Rome, Miami, Paris, Shanghai, Cincinnati. Which of these is not like the others?
Tennis is a sport of glamour and luxury, attracting jet-setting spectators who travel the world’s sumptuous cities for Grand Slam events — the Australian Open, The French Open, Wimbledon, and the U.S. Open — and other tournaments considered mandatory for top-tier players. Particularly attractive for fans are the rare events outside of the Grand Slams that feature both men’s and women’s draws.
Center Court by Vince Kincer
The Western & Southern Open brings the world’s top male and female players to the Cincinnati, Ohio, area every August. Held at the Lindner Family Tennis Center, 20 miles north of Cincinnati in Mason, the W & S Open is the largest annual summer sporting event in the Midwest. On the Association for Tennis Professionals (ATP) men’s tour, it’s a Masters 1000 event, ranked just below the Grand Slams and ATP Finals. For the Women’s Tennis Association (WTA), it’s a Premier 5 event.
Because of the prestige, the prize money, and the fact that it’s the last major tournament before the U.S. Open (and played on the same surface), the tournament is a big draw for the world’s top players. That means the likes of Roger Federer, Rafael Nadal, Serena Williams, and Naomi Osaka are courting tennis fans from around the world who are willing and able to spend top dollar to see these aces in action.
Another reason this tournament is a big attraction for fans is that it’s the only major tennis tournament held in the Midwest. And, as Shawn Leibold, director of business development for the Western & Southern Open points out, “It’s easily accessible from a distance perspective, and it’s really the U.S. Open at Midwest prices.”

Mind you, even though both admission and items like lodging and food are less pricey in Ohio than in New York, the Western & Southern Open is still not a cheap ticket. But judging from recent event sellouts, the cost doesn’t appear to be a problem. Perhaps that’s because tennis fans, in general, are big spenders. That W & S Open fans are well-heeled is borne out by the statistics that the average ticket holder has a household income of $150,000.
“Tennis historically, looking at the data from high-level professional tournaments — first of all, fans travel from all over to go. They tend to travel greater distances [than spectators for most other events]. Two, they spend more than most sports fans do at any other kind of sporting event. They stay at the nicer hotels, they eat at the fine restaurants. They typically would spend more than someone who might be coming [to Cincinnati] for a Reds games,” said Gordon Smith, CEO and executive director of the U.S. Tennis Association (USTA).
Novak Djokovic by Ben Solomon
Naturally, the tournament is a vast economic contributor to the Greater Cincinnati region. According to a 2017 tournament economic impact study, tournament operations and non-local visitor spending generated a total economic impact of $46.3 million that year. The greatest impact was spending by non-local attendees. Sixty-seven percent of the nearly 200,000 fans were non-local, coming from 4,000 US ZIP codes and 25 countries.
On average, each non-local spent three days at the event, spending approximately $200 per day on hotel stays, food, and retail goods; spending figures do not include tournament tickets. That compares with the $108 daily spend rate for the average leisure visitor to Cincinnati. Aside from revenue earned by local vendors, state sales tax accumulated during the event totaled more than $545,000.
It’s expected that the spend will only increase this year, thanks to the new $25 million South Building, which sits smack dab in the middle of the tournament’s two largest courts. The five-story structure adds more luxury seating, including suites, outside boxes, and 252 indoor, air-conditioned box seats, along with upscale restaurants and concession areas.

ADVANTAGE, CINCINNATI


The tournament’s impact, however, extends far beyond the money it brings in during its run. The Western & Southern Open envelops Cincinnati in an aura of luxury, which can go a long way in place-making efforts.
cincyusa.com

“The build of an annual event of this caliber has a range of incredible value not just as an event, but it also helps hype the value of the place as a destination,” said Candy Lee, a professor of sports marketing at Northwestern University.
For example, event sponsors this year include Emirates, Porsche and Rolex. These companies help spread word about the tournament and the city to their clients throughout the year and bring high-spending guests to the tournament.
“When sponsors bring in their clients from around the world, using it as a hospitality event, it furthers the area of Cincinnati as a destination,” Lee said.
Randie Adam, vice president, marketing and visitor services for Cincinnati USA, the region’s convention and visitors bureau, agrees.
“Professional sports are a top driver for leisure visitation. This is a tent pole event for our region, an event to hang our hat on. The exposure is reputation-driving. It’s a perception issue that we overcome through these events — we can live up to the luxury expectation,” she said.

cincyusa.com

Said Mike Laatsch, former chief operating officer of Cincinnati USA, as quoted in the economic impact study. “You know, when Serena Williams is walking around Cincinnati, it gets people’s attention. It helps underscore the power of the event, but also…one of the key things the Western & Southern Open has done is build credibility, nationally and internationally, that Cincinnati is a major world-class city.”
Susan Lomax is executive director of Source Cincinnati, the city’s marketing arm. She believes the event is crucial in helping to build the region’s reputation.
“The tournament is a very unique forum for the Cincinnati region, drawing thousands of business executives who zero in on high-end sports tourism experiences, global tennis fans who might not otherwise have this part of the Midwest on their radar,” she said.
“For a city of Cincinnati’s size to have a sporting event of this magnitude immediately creates a sense of curiosity around what other surprises this city might have in store. It really opens eyes to the quality of life and experiences offered here to new potential talent, business investors, and visitors.”
This story originally appeared on Skift, for which I am the luxury correspondent.

Friday, February 9, 2018

What's New in the World of Global Wellness Trends

Starring in your own distinctive adventure, female empowerment and trips for mushroom tripping are all in vogue for travelers, according to a new report from the Global Wellness Summit (GWS).


The newly released 2018 study identifies eight trends that will have a meaningful impact on the $3.7 trillion wellness industry. Many of these trends pertain to the luxury travel arena as well, since novel wellness trends often manifest first in high-end vacation spaces.


Travel marketers talk a lot about storytelling and experiences these days, but one of the GWS trends takes the journey steps further.
As Beth McGroarty, director of research for GWS, notes, by its nature, “travel is an ongoing quest versus piecemeal, disconnected experiences.”
Yet, itineraries provided at wellness destinations often do not connect the dots. McGroarty, the lead author of the report says, “We predict more wellness destinations will use the power of circuits and epic storylines” to create linked experiences, where the traveler is the pilgrim in an immersive story. The report calls this trend Circuits, Sagas and Epic Storylines.
It cites several examples of multi-chapter journeys, ranging from theatrical travel sagas to real-life games of Survivor.
For example, London-based Based on a True Story creates adventures for its well-heeled clients involving epic stories featuring multitudes of sets, actors and locations. According to founder and CEO Niel Fox, these journeys cast travelers as the heroes of their own stories. He cites “A Greek Odyssey… an adventure that unfolded with hundreds of actors, as a family encountered gods and goddesses…as well as having to overcome mythological monsters…. as they uncovered a trail of gold.”
Image result for six senses bhutan
Six Senses Bhutan
A more wellness-oriented saga is unfolding as Six Senses embarks upon a new venture in Bhutan. A story-based wellness circuit opening in autumn will have guests traveling among five lodges, where they will discover programming based on the pillars of Bhutan’s Gross National Happiness Index. Six Senses is developing similar experiences elsewhere.
“A focus on multi-property wellness circuits will be a much bigger priority for us going forward,” says Vice President of Spas and Wellness Anna Bjurstam.
Black Tomato’s Get Lost program exemplifies this trend, plus another—that of Extreme Wellness. The $30,000 Survivor-style trips often require travelers to begin training months in advance so they are ready for the mental and physical challenges that await when the company drops them off in the middle of nowhere.
Less pricey and more civilized, but also extreme, many resorts are adding Body Boot Camps to their programming menus.
But the trend of Extreme Wellness is not just about exhaustion. It also encompasses “hacking our way to better brains, bodies and overall well-being.”
The report says, “Expect wellness destinations to create customized, individual programs through combining personal biomarker screenings for assessing body composition, stress, and prevention, with a fitness tests for optimizing performance.“ A handful of high-end wellness resorts are already on the mark with this trend, including Six Senses and Canyon Ranch.
Image result for canyon ranch
canyonranch.com
Several of the report’s other trends are relevant to high-end travel as well. One of the components of Getting our “Clean Air Act” Together is tourists avoiding going to polluted cities (or seeking to leave their own).
An obvious example comes from China. According to Ctrip.com, a leader in providing travel services to the Chinese market, smog avoidance and lung cleansing is becoming a major theme for luxury travelers there. Marketers are therefore touting destinations like the Seychelles, Maldives and Iceland as fresh air getaways.
Iceland's pristine air is a big draw for Chinese tourists

A New Feminist Wellness builds on the recent wave of for-women, by-women businesses. Given that Merriam-Webster picked feminism as its 2017 Word of the Year, travel aimed squarely at women’s empowerment is timely and highly promotable. High-end, women-owned operators like Wild Women ExpeditionsAdventure Women and Whoa Travel are leading the charge.

Likely the most offbeat of the trends examined is Mushrooms Emerge from Underground.  According to the report, “Magic mushroom retreats, in nations where legal, will continue to pop up…where the ‘trip’ gets combined with increasingly luxe wellness experiences.”
MycoMeditations is a pioneer in the movement. The company offers weeklong retreats in Jamaica for fungi trippers. It may seem a bit out there, but then again, in 2015, GWI was among the first mainstream trendspotters to predict the budding of cannabis tourism for wellness purposes.

This story originally appeared in Skift New Luxury, for which I am the correspondent.